The Problem of Free Riding in Voluntary Generic Advertising: Parallelism and Possible Solutions from the Lab |
| |
Authors: | Kent D. Messer Harry M. Kaiser William D. Schulze |
| |
Affiliation: | Kent D. Messer is Assistant Professor, Departments of Food and Resource Economics and Economics at the University of Delaware. Harry M. Kaiser is Professor, Department of Applied Economics and Management at Cornell University. William D. Schulze is Professor, Department of Applied Economics and Management, Cornell University. |
| |
Abstract: | Producers of many commodities pay for generic advertising, which is a public good for producers and, in cases like healthy foods, enhances social welfare. Though most programs were initially funded through the Voluntary Contribution Mechanism, many became mandatory to mitigate free riding. This experimental research simulates key economic and psychological details of these programs and produces donation results strikingly similar to a historic example. Because mandatory programs may be declared unconstitutional, the Provision Point Mechanism is tested as an alternative. This research also shows that refund-by-request donation mechanisms establish a status quo of contributing and reduce free riding. |
| |
Keywords: | experimental economics generic advertising provision point status quo bias voluntary contributions |
|
|